1. Field of the Invention
The present invention generally relates to electronic commerce (e-commerce) systems and, more particularly, to a method and system for generation, distribution, storage, redemption, validation and clearing of electronic coupons.
2. Background Description
Various sales promotion mechanisms exist like prizes, contest, sweepstakes, games, free samples, product warranties, tie-in promotions, loyalty points, cross-sell, up-sell, premium, memberships, card discounts and gift certificates. These have been used for a long time to retain loyal customers, to increase the repurchase rate of occasional, to attract new buyers, to manage inventory and to gain market. We refer to all these mechanisms and others such as instant discount which is similar to haggling or negotiations in the real world, as “coupons” in this invention.
With the advent of Internet shopping, the electronic equivalent of coupons have also come into existence. There are three types of models that are possible; coupons that are issued at an e-commerce site and redeemed at a physical store, those issued and redeemed at a single e-commerce site and others that are issued at one e-commerce site and redeemed at another e-commerce site. The most general electronic coupon generation, presentation, redemption and clearing system should allow a consumer to collect electronic coupons while doing online shopping, or otherwise visiting an e-commerce site, from various e-commerce sites and redeem these coupons online at any e-commerce site or physical store, satisfying the purchase conditions of the offer. The clearing between the issuing and redeeming e-commerce sites should also be electronic, whether off-line or online. The issuing e-commerce site is commonly referred to as the manufacturer and the redeeming e-commerce site is referred to as the retailer.
Various kinds of frauds are possible in an electronic coupon generation, presentation, redemption and clearing system such as double spending of electronic at same or different sites by the customer, tampering of electronic coupons to modify the validity period, discount amount or conditions by the customer, creation of a fake electronic coupon by the customer, trading of coupons between customers, duplication of electronic coupons by the retailer and claiming them from the manufacturer, retailer colluding with other retailers to exchange the list of redeemed coupons, tampering of electronic coupons by the retailer. These frauds often defeat the objective of targeting or limiting the number of coupons by the coupon issuer and also make it difficult for the coupon issuer to estimate coupon redemption rate or budget for a coupon campaign.
Most of the e-commerce sites like www.e-coupon.com, www.coolsavings.com, www.directcoupons.com, www.speciallinks.com, www.coupondirectory.com, etc., offer coupons on-line, as an image or a bar code, that the user can print on a local printer and use in a particular physical store. Many of these sites are actually third party coupon distributors, distributing coupons online on behalf of various merchants. Meals Online, www.meals.com, allows consumers to request online for delivery of coupon offers by mail, on answering a short questionnaire online. All these sites still require the customers to carry paper clippings of the coupons to a physical store, for redemption and do not target customers or limit coupon distribution. At one e-commerce site, www.supermarkets.com, the consumers can print the complete list of offers for physical supermarkets in the consumer's geographical location. At the checkout, the consumer can ask the cashier to scan the bar code at the top of the list. As the bar codes on the promotional items are scanned, it prompts the printing of “Web Bucks”, which can be redeemed on subsequent visits to the store. The limitation with “Web Bucks” is that they are paper bucks in some sense, but can only be redeemed at the same store that issued the web bucks and work only for physical stores.
U.S. Pat. No. 5,420,606 to Begum et al. for “Instant Electronic Coupon Verification System” describes an instant electronic coupon verification system for a single physical store, where the store provides shoppers with an electronic device to view, select and store from a plurality of coupons and later redeem the coupon on reaching a checkout counter, based on items purchased. This is also limited only to physical stores and does not talk about any targeted coupon distribution.
The effectiveness of coupons can be greatly improved by targeting a specific profile of customers for coupons of specific products. Among targeted coupons, U.S. Pat. No. 5,502,636 to Clarke for “Personalized Coupon Generating and Processing System” proposes a personalized coupon generating and processing system which identifies a group of consumers that are likely to be responsive to coupons of predefined products and then distribute the coupons.
U.S. Pat. No. 5,909,673 to Gregory for “Method and System for Creating Site Specific Coupons at a Plurality of Remote Locations Which are Controlled by a Central Office” proposes a central server connected to multiple remote sites to allow the retailers to be able to customize discounts and coupon details according to the particular store location. A general coupon template is loaded onto the central server alone, with site specific information to be printed on each coupon. A particular remote processing station at a remote site can call in to the central server and download the general coupon template and the site specific information for that particular site. The remote processing station then combines the template with the site specific information and prints the site specific coupon. These inventions describe mechanisms only for generation of targeted coupons, without any mention of online coupon redemption, verification and clearing.
Various methods and systems have been proposed for electronic coupon generation, management and redemption at a single e-commerce site. U.S. Pat. No. 5,894,520 to Nielsen for “Method and System for Regulating Discounts on Merchandise Distributed Through Networked Computer Systems” describes a method and a system for regulating discounts on merchandise, at a vendor location, through networked computer systems. The system includes a user computer and a vendor computer connected via a network. when a user purchases a merchandise, the vendor issues an encrypted discount coupon for repurchase of the merchandise. When user desires to repurchase the merchandise, user sends a request to the vendor along with the encrypted coupon. The vendor verifies the coupon and gives the discount. An earlier paper by the authors (M. Kumar, A. Rangachari, A. Jhingran, and R. Mohan, “Sales Promotions on the Internet”, Third USENIX Workshop on Electronic Commerce, Boston, 31 Aug.–3 Sep. 1998, pp. 167–176) describes a form of sales promotion for online merchants called e-coupons. A buyer need not print e-coupons as they can be captured electronically in an electronic coupon-wallet, and later redeemed electronically on the same on-line store. They solve the issue of targeted, limited online distribution and redemption of electronic coupons at a single online store, but it is not clear how they can handle coupons issued by a manufacturer which may get redeemed at any online store.
Several centralized service provider based systems have also been proposed for giving merchandise discounts. These systems do not issue any coupons to the customer, but just offer various discounts when the customer visits the retailer store for shopping. U.S. Pat. No. 5,185,695 to Pruchnicki for “Method and System for Handling Discount Coupons by Using Centrally Stored Manufacturer Coupons in Place of Paper Coupons” describes a method and system for handling discount coupons by using centrally stored manufacturer coupons in place of paper coupons, to save costs of printing and distributing and clearing paper coupons. The method and apparatus includes a central processor that receives information of product type, validation period and coupon value from manufacturers and produces a central coupon list of available coupon discounts. The central list is transmitted to retailers who produces a local coupon list based on the central list containing only those manufacturers and product type which the retailer holds for sale. The customer buys a product and as the product is moved through the checkout station, coupon discount, if any applicable, is deducted from the retail price. The central processor directly bills the manufacturer or transfers funds.
U.S. Pat. No. 5,924,080 to Johnson for “Computerized Discount Redemption System” describes a similar method of giving merchandise discounts by using a membership system comprising of a centralized system provider, multiple manufacturers, multiple merchants and multiple customers. But none of these systems are doing any targeted discounts; they are just giving discounts on the customer purchases without issuing any coupons to the customer at all, hence they do not describe any coupon distribution, redemption or verification mechanisms.
Another mechanism of giving merchandise discounts is in the form of transaction points. U.S. Pat. No. 5,923,016 to Fredregill et al. for “In-Store Points Redemption System & Method” describes a computer implemented consumer transaction point accumulation system in which a consumer earns and accumulates points immediately for immediate use during transactions at participating retailer outlets, wherein at each transaction, a customer's identification number is transmitted to. a central system which stores customer records including a customer balances of points accumulated to date. This does no targeting and is only limited to one form of coupons i.e. transaction points and is not a solution for a generic coupon that can be in the form of price-packs, cross-selling, gift certificates, and the like.
An e-commerce site, www.planetu.com, provides targeted offers that the consumer has the opportunity to select. After selecting their offers online, consumers receive them either by mail or redeem them at supermarkets with modem point-of-sale systems by swiping their frequent shopper card, the offers being automatically deducted at the point of sale. This system does targeted coupon distribution, but coupons can be redeemed only at physical retail shop. Besides, it requires the consumers to have a frequent shopper membership and the central server to maintain all coupon and consumer selection details.
Smart-card based coupon management and redemption systems have also been proposed such as U.S. Pat. No. 5,727,153 to Powell for “Retail Store Having a System of Receiving Electronic Coupon Information from a Portable Card and Sending the Received Coupon Information to Other Portable Cards” for single physical retail store, U.S. Pat. No. 5,905,246 to Fajkowski for “Method and Apparatus for Coupon Management and Redemption”, and U.S. Pat. No. 5,380,991 to Valencia et al. for “Paperless Coupon Redemption System and Method Thereof” for targeted merchandise price markdown. The limitation of these systems is that they only talk about physical stores and the user has to carry a smart card.
An electronic coupon issuing, redemption, verification and clearing system, was proposed in the U.S. Pat. No. 5,855,007 to Jovicic et al. for “Electronic Coupon Communication System”. This system comprises a first Internet node, an Internet coupon server and an Internet coupon notification center. The Internet coupon server generates a unique Internet coupon using a coupon generation process. The Internet coupon server accepts an on-line selection of one of the available unique Internet coupons from a user of the Internet node and transmits the coupon back to the user's printing device or e-mail storage. It then records the transaction in its coupon database and notifies the transaction to the Internet Coupon Notification Center. The Internet Coupon Notification Center subsequently records the transaction. Furthermore, a coupon redemption center can electronically verify coupon validity and record coupon redemption by communicating with the Internet Coupon Notification Center. It handles online targeting, generation, redemption and verification of electronic coupons between a manufacturer and a plurality of retailers, but it is not clear how it handles frauds such as a customer or a retailer colluding with the Notification Center or coupons from a plurality of manufacturers.